Moody’s has downgraded Eon’s long-term credit rating from Baa1 to Baa2 after the German energy giant reported a massive €16 billion loss in 2016 – the largest in the company’s history.

The ratings agency said measures announced by the group to improve its financial profile, including a cost cutting drive, were not considered sufficient to avert the downgrade. Eon retained its P-2 short-term credit rating, although Moody’s changed its outlook from stable to negative.

“In common with its German peers, Eon has been adversely affected by the externalisation of the nuclear storage obligations as well as a challenging commodity price environment,” Moody’s said in a statement.

Earlier this week the Eon group reported a whopping €16 billion net loss in 2016 due to the “deep marks” left by €11 billion of write-downs and €3.6 billion of currency losses relating to the Uniper spin-off and a €2 billion contribution towards a nuclear waste storage fund in Germany.

The company has agreed to contribute a further €8 billion to the fund in 2017. In exchange, the German state will take over its future liabilities for nuclear waste storage in the country.

Moody’s said Eon’s situation has been exacerbated by the macroeconomic environment of low interest rates and rising inflation, which have affected the size of its nuclear decommissioning and pension liabilities. They constitute a “large portion” of the group’s debts and are therefore weighing down its rating. The agency said rising interest rates are likely to alleviate pressure on Eon’s finances but only gradually.

Eon has announced or implemented a number of measures to shore up its finances, including a drive to cut annual costs by €400 million by 2018, a 20 per cent reduction in its investment budget for the current three-year period to €8 billion, and the possible sale of its 46.65 per cent interest in Uniper. Moody’s said a “speedy disposal” of this remaining stake would accelerate Eon’s recovery.